Reengineering Business Processes

Those organizations that have been bold enough to pursue true business process reengineering as compared to process improve­ment have reaped huge rewards. Following are examples of actual implementation successes and some of the quantifiable benefits. In several of these cases the greatest benefit was to continue as a viable business concern rather than to go belly-up.

• This investment and business services enterprise felt that they were expending far more in costs for their centralized purchas­ing function than it was returning in value to the organization. With a sluggish economy and aggressive competitors, this industry leader needed changes in operating approaches to ensure continued success in the future. They used the concepts of business process reengineering to eliminate 80% of the cost associated with centralized purchasing activities. Credit cards were issued to all employees with a personal I.D. The I.D. contained the authorized purchase level for each employee. Now when office supplies, office equipment, or other services are required by any of the several dozen offices around the world, employees simply call-up an authorized vendor and place their order. Totals are automatically captured as with any credit card and the budget limitations are controlled via 

the credit limits assigned to the card.

• This U.S. based fast food chain operator found themselves in a sagging business condition. Profits were down, overhead as a percentage of revenue was raising, and worst of all sales were sluggish. They used the concepts of business process reengineering to reevaluate what their customers truly wanted, good, hot food, at a low price. Using these simple customer expectations as their foundation, they went about redesigning everything about their business processes around the expecta­tions. What they ended with was restaurants that held 100% more customers, kitchen areas that were one third the size, automated assembly of some key food items and 600% sales growth in just three years.

• This major manufacturer of computer equipment also provides credit services to its customers who purchase their products. In fact this credit operation controls and monitors loans in the billions of dollars each year. The problem was the credit application process. Certainly one could understand how a complex product like computers would require more time for loan processing—but over 30 days! Customers were canceling orders due to the frustration associated with the loan process. Using business process reengineering the loan application process was simplified, redundant activities were eliminated, and employees were empowered to control a loan application from its inception to final approval for the customer. The process cycle time was reduced to under 8 hours and customers have started to return. There were no direct savings associated with this initiative; however, it was far more strategic, pro­viding a trouble-free and pleasant process by which funds could be obtained to procure their equipment.

• This consumer product manufacturer was faced with a trou­bling dilemma, its key customers were demanding services of it that it was not capable of providing. As time moved on more and more customers were making similar demands. The current lack of EDI capabilities, and inability to manage inventory were placing it at a serious competitive disadvan­tage. The company's approach for maintaining market share was to use people-power to overcome their lack of technolog­ical capability. They realized that the dike was soon to break so they organized a business process reengineering effort. Project managers were sent to off-site training and when they returned they formed a team to redesign their key customer interface process—order management. The outcome of this redesigned process went well beyond customer's current expectations and positioned the company as a technological leader for years into the future. Typical process performance included: 1 day order cycle time, 35 inventory turns per year

(a little over 10 days' supply), 100% perfect order completion, paperless processing throughout the supply chain.

These examples represent a sampling of the techniques and approaches successfully implemented by companies like yours. The list grows longer daily.

Conclusion

Now comes the difficult news, business process reengineering is not for everyone. It's tough, it's painful, and 7 times out of 10 it ends in failure. Why such a high failure rate? Most failures are attributed to lack of project leadership at the top or are caused by the difficulty associated with looking at our world in a radically different way. Lessons have been learned by these failed attempts, persistence and patience must go hand in hand when attempting radical change within a business environment. A sound change management plan must be put in place to support the process redesign. Employees must feel that they have a stake in the new process design and can therefore take the risk to support it. Executive level commitment must be obtained prior to the initia­tion of any project.

While risks of failure in business process reengineering are tremendous, the rewards are phenomenal. Companies at serious risk of failure can use the approach as an aid to design processes that achieve their fundamental objective—servicing their cus­tomer. Stronger organizations can use the approach to further distance themselves from the pack while improving profitability. Those individuals selected as project managers can distinguish themselves within the organization. The real key is to ensure:

• the right management commitment is in place prior to starting

• the project team consists of the best of the best

• the customer's needs are at the core of all activities

• the team challenges the current and provides a path for the future.